A short ‘FYI’ update on USD (DXY). To review, in September USD halted at the resistance cluster from 2000-2002.
It held support at 110, bounced to test the previous high and is thus far failing that test with a MACD that is not looking good at all. Downside follow-through is needed and our first key support target is now 110 (again), but it’s more important now because as noted last week would be the case, it now includes the rising SMA 50.
A failure at 110 would theoretically give us an extended contrary play in the anti-USD items (which are most markets/assets to varying degrees). A hold could bring new asset market pain.
Bottom line though, is that we can add USD to the list of things we are watching in order to potentially spring a significant and tradable asset market rally in Q4. This would be added to bleak sentiment, the election cycle and extremes in bonds as fuel for a rally, if applicable.